How Australia Bungled Its $36 Billion High-Speed Internet Rollout

Image

A computer lounge at the University of New South Wales, in Sydney. In a recent list of internet speeds, Australia ranked 51st, trailing developing economies like Thailand and Kenya.CreditCreditJason Reed/Reuters

By Andrew McMillen

May 11, 2017

BRISBANE, Australia — Fed up with Australian internet speeds that trail those in most of the developed world, Morgan Jaffit turned to a more reliable method of data transfer: the postal system.

Hundreds of thousands of people from around the world have downloaded Hand of Fate, an action video game made by his studio in Brisbane, Defiant Development. But when Defiant worked with an audio designer in Melbourne, more than 1,000 miles away, Mr. Jaffit knew it would be quicker to send a hard drive by road than to upload the files, which could take several days.

“It’s really the big file sizes that kill us,” said Mr. Jaffit, the company’s co-founder and creative director. “When we release an update and there’s a small bug, that can kill us by three or four days.”

Australia, a wealthy nation with a widely envied quality of life, lags in one essential area of modern life: its internet speed. Eight years after the country began an unprecedented broadband modernization effort that will cost at least 49 billion Australian dollars, or $36 billion, its average internet speed lags that of the United States, most of Western Europe, Japan and South Korea. In the most recent ranking of internet speeds by Akamai, a networking company, Australia came in at an embarrassing No. 51, trailing developing economies like Thailand and Kenya.

For many here, slow broadband connections are a source of frustration and an inspiration for gallows humor. One parody video ponders what would happen if an American with a passion for Instagram and streaming “Scandal” were to switch places with an Australian resigned to taking bathroom breaks as her shows buffer.

But the problem goes beyond sluggish Netflix streams and slurred Skype calls. Businesses complain that slow speeds hobble their effectiveness and add to their costs. More broadly, Australia risks being left behind at a time when countries like China and India are looking to nurture their own start-up cultures to match the success of Silicon Valley and keep their economies on the cutting edge.

“Poor broadband speeds will hold back Australia and its competitive advantage,” said John O’Mahony, an economist at Deloitte Access Economics. A 2015 report by Deloitte valued the nation’s digital economy at $58 billion and estimated that it could be worth 50 percent more by 2020. “The speed of that growth is at risk if we don’t have the broadband to support it,” he said.

The story of Australia’s costly internet bungle illustrates the hazards of mingling telecommunication infrastructure with the impatience of modern politics. The internet modernization plan has been hobbled by cost overruns, partisan maneuvering and a major technical compromise that put 19th-century technology between the country’s 21st-century digital backbone and many of its homes and businesses.

The government-led push to modernize its telecommunications system was unprecedented, experts say — and provides a cautionary tale for others who might like to try something similar.

“Australia was the first country where a totally national plan to cover every house or business was considered,” said Rod Tucker, a University of Melbourne professor and a member of the expert panel that advised on the effort. “The fact it was a government plan didn’t necessarily make it doomed. In Australia, we have changes of governments every three years, which really works against the ability to undertake long-term planning, and the long-term rollouts of networks like this.”

Australia poses natural connectivity challenges. It lies oceans away from other countries, and any network would have to connect far-flung cities separated by its sparsely populated interior.

Still, Australia had high hopes for its ambitious internet project. Started in 2009, the initiative, known as the National Broadband Network, was intended to bring advanced fiber-optic technology to the doorstep of just about every home and business. It was initially estimated to cost 43 billion Australian dollars, shared by the government and the private sector.

“Years of failed policy have left Australia as a broadband backwater,” said Kevin Rudd, then the prime minister and leader of the Labor Party.

But the government share of those costs quickly climbed until taxpayers were responsible for all of it. The technology was slow to roll out, in part because of negotiations with Telstra, Australia’s big telecommunications provider, over installing the fiber. (A Telstra spokesman said the company did not believe the talks added to delays.) The government-funded effort drew fire from the Liberal Party, the opposition at the time, which said the job should have been left to the private sector.

After a Liberal-led coalition was elected in 2013, that party looked for ways to contain costs and speed up the rollout. They focused on what in the telecommunications industry is called “the last mile” — the wires that connect a home or business with the broader network. While the National Broadband Network initially envisioned high-speed fiber connecting homes and businesses directly to the network, the Liberal-led effort compromised by connecting them with existing copper wire — basically, the same technology used in the earliest days of the telephone.

The result, critics say, was slow speeds that still did not stop rising costs.

“Australia had an aggressive, forward-looking, visionary government project to build a fiber network,” said Mike Quigley, who was chief executive of the project until 2013. He added, “that opportunity’s been absolutely lost because of bad judgments, ideologically and politically driven.”

A spokeswoman for the Liberal Party said that under its stewardship, the initiative was connecting more new users than the Labor Party ever did. But neither party placed fixing the internet high on their campaign platforms in national elections last year, perhaps indicating how difficult the problem will be to solve.

Average speeds have more than doubled since 2013, according to Akamai, but other countries are connecting their populations faster, meaning Australia’s lag with the rest of the world has grown. Big businesses can opt to pay for fast connections, but the cost can be considerable for smaller companies.

GO1, an education technology company near Brisbane, spent about $22,000 on a speed upgrade in September 2015. It now pays nearly $1,000 a month for its high-speed, 100 megabit connection. “As a software company, our two main costs are internet and staff,” said Andrew Barnes, the chief executive and co-founder. “If the former was lower, then we have more to spend on building up the team.”

“Vietnam’s one of those countries where you look out the window and the telephone wires are just a mess,” he said. “But somehow, despite the obvious infrastructure problems, the internet there is much, much better.”

The video game industry in particular has pushed for better speeds. “Right now, we are all on dirt roads,” Ben Britten, chief technology officer at Mighty Games Group, said at a Senate hearing last year on his industry’s future. “We are trying to push huge semi trucks down dirt roads, and we just need to have some highways.”

Others, for their part, look for ways around the barriers — including old-fashioned radio.

Nick Lorenzi, who lives in Cairns, in northeastern Queensland, was frustrated with his copper-wire speeds, especially since a friend just a few miles away had a much faster fiber connection. Investigating online, Mr. Lorenzi, 25, an information technology worker, found out how to bum bandwidth from the friend using two transmitter dishes that cost $440 total.

“I just knew that the internet was rubbish where I was, so I thought, what else can I do here?” he said. “I’m up really high on a hill, so I can take advantage of that.”

Mr. Lorenzi has since moved, and he says his copper-based connection speed once again is “just rubbish.”

“For a country as far along as we are, our internet’s just not aligned with that at all,” he said. “It’s just pathetic, really.”

A version of this article appears in print on , on Page A6 of the New York edition with the headline: How Australia Bungled Internet Modernization. Order Reprints | Today’s Paper | Subscribe